The average annual return over the period 1926-2009 for the S&P 500 is 12.0%, and the standard

deviation of returns is 21.3%. Based on these numbers, what is a 95% confidence interval for

2010 returns?

A) - 1.5%, 21.8%

B) - 10.7%, 32.8%

C) - 30.6%, 54.6%

D) - 30.6%, 76.4%

Question

Business

Ismael Dudley

17 August, 16:31

The average annual return over the period 1926-2009 for the S&P 500 is 12.0%, and the standard

deviation of returns is 21.3%. Based on these numbers, what is a 95% confidence interval for

2010 returns?

A) - 1.5%, 21.8%

B) - 10.7%, 32.8%

C) - 30.6%, 54.6%

D) - 30.6%, 76.4%

+1

Answers (1)

Know the Answer?

Dennis Ray · Answer 1

C) - 30.6%, 54.6%

Explanation:

95% Confidence Interval = (Average Return - 2*Standard Deviation, Average Return + 2*Standard Deviation)

= (0.12 - 2*0.213, 0.12 + 2*0.213)

= - 30.6%,54.6%

Therefore, The 95% confidence interval for 2010 returns is - 30.6%,54.6%.

The average annual return over the period 1926-2009 for the S&P 500 is 12.0%, and the standarddeviation of returns is 21.3%. Based on these numbers, what is a 95% confidence interval for2010 returns?A) - 1.5%, 21.8%B) - 10.7%, 32.8%C) - 30.6%, 54.6%D) - 30.6%, 76.4%

The average annual return over the period 1926-2009 for the S&P 500 is 12.0%, and the standard

deviation of returns is 21.3%. Based on these numbers, what is a 95% confidence interval for

2010 returns?

A) - 1.5%, 21.8%

B) - 10.7%, 32.8%

C) - 30.6%, 54.6%

D) - 30.6%, 76.4%